Differentiating products to gain competitive advantage in the international market
By definition, competitive advantage is the advantage that a company gains over its competitors because of offering products of greater value to its customers (James 236). A company may attain competitive advantage over its competitors by simply differentiating its products. According to Boyles, successful product differentiation reduces consumers’ sensitivity to prices; thus, enable companies charge higher prices for their differentiated products (Boyes 188). This paper evaluates how companies attain competitive advantage over their competitors in the international market through product differentiation.
From a general viewpoint, every company operating either locally or in the international market aims at attaining a competitive advantage over its competitors. The outright reason for doing this is to make more profit than competitors make by simply increasing sales. Certain companies have been able to attain competitive advantage by simply differentiating their products. For example, Rolex Company that manufactures watches has been able to attain competitive advantage over its competitors in the international market by simply differentiating its products (Griffin 72). The company differentiates its watches by manufacturing them using precious metals. As a result, the company sells more watches at higher prices to its esteemed customers than its competitors do because its esteemed customers perceive these watches to be of high quality. By so doing, Rolex Company attains competitive advantage over its competitors in the international market. On the other hand, Coca Cola Company has been able to attain competitive advantage in the international market by differentiating its products. For example, the company differentiates its Dasani water from Pepsi’s Aquafina water on the basis that its Dasani water has fresh taste. The company also differentiates its soft drinks through its brand name (Griffin 72). Starbuck has also been able to differentiate its coffee through brand name. As a result, the company has attained competitive advantage over its competitors because consumers perceive Starbuck’s coffee to be of higher quality than those of its competitors (Boyes 188).
Product differentiation simply means producing products that are unique or dissimilar in a way from those of competitors. For example, companies may produce cars that serve the same purposes, but differentiate these cars by types or models. Companies in the food industry may differentiate their products by taste, color or prices. In order for a company to differentiate its products, the company should identify what the customers need most. After identifying what the customers need, then the company can position itself in a way that convinces customers that its products are of high quality (James 236). In other words, the company needs to convince customers that the products it offers to them are unique because they are designed specifically to address their needs. When a company convinces its customers that differentiated products meet their needs, the company is able to charge a higher price for those products. The company does this because consumers cease to pay much attention to the price, but pay attention to the value they acquire from the products in question (Boyes 188).
For the companies operating in the international market to attain competitive advantage over their competitors, they need to differentiate their products rather than merge with other companies. Differentiating products and convincing customers that the products in question are of high quality enable such companies to charge higher prices. In conclusion, product differentiation is a simple method that companies scan use to attain competitive advantage in the international market other than merger and acquisition.
If you were a marketing manager in the international market, would you propose to your company to differentiate its products to attain competitive advantage in the new market or merge with existing companies?
Boyes, William. Managerial economics: markets and the firm. Mason, Oh: South-Western Cengage Learning, 2011. Print.
Griffin, Ricky. Fundamentals of Management. Mason, OH: South-Western Cengage Learning, 2012. Print.
James, Harvey. The Ethics and Economics of Agrifood Competition. Dordrecht: Springer, 2013. Internet resource.